Yes - before you ask, that headline took me over 10 minutes to come up with...
As we watch shorts taken off the field in ambulances, I find the exercise of due diligence (i.e. fundamental analysis) almost moot. Our correlations are extreme (
Jun 30, 2009: Bloomberg - Correlations Among Asset Classes Highest Ever) and as I've been repeating for a year now - this is not a stock pickers market. Market direction is most of the battle; today is a great example. That said, I like to practice the dark arts that were popular in the 40s, 50s, 60s, 70s, 80s, 90s, and even some of the 00s - before HAL9000 and crew took over. Call me part of the underground movement....
So as we continue to look for names that are actually growing, rather than slashing and burning, their way to profits - I want to make the first post in our 2 years here about a sector I was once heavily into: "hosting services". I've been watching this group for a while, but all this talk of high frequency trading, program trading and HAL9000s made me think of all the computing power necessary to execute said strategies. I will have a guest blogger ready with a piece shortly to do a post more devoted to the sector and its players, but first a trip down memory lane. This was an area I traded in 1999... in fact we're seeing a lot of retro stocks / sectors from 1999 coming back en vogue all the sudden. And why not, a Fed chief intent on blowing bubbles usually will get his way sooner or later - 1990s or 2000s, it's all the same printing press technology. Flip a Greenspan with a Bernanke and it still ends the same.
In 1998-1999 one of my go to names was a "hosting" company: Exodus Communications (EXDS) - which used to be the king in "the day". In fact I was wondering whatever happened to it, and lo and behold
Wikipedia has an entry. Come sit on grandpa's lap as he tells you about the days when Uncle Greenspan had to walk uphill, both ways, in snow - to provide us with all the tinder in the world to make beautiful bubbles - as we didn't want to have an actual recession post 1998 Asian currency crisis. Ah the late 90s NASDAQ years....
- Exodus Communications was a Global Web Hosting Company in Santa Clara, California. They completed an IPO on the NASDAQ in March 1998, their stock symbol was (NASDAQ: ).
- It had four stock splits in approximately 18 months
- Two of every three to four Internet crossing packets traversed the Exodus network, at its peak.
- Hosted most major websites such as Google, eBay, Yahoo!, PayPal, BestBuy, Weather Channel, Merrill Lynch, American Airlines, Microsoft, Hotmail, Dilbert.com, Virgin Mobile, O2 Plc, Geocities, Nextcard, etc.
- Exodus Market Cap Peaked ~32 Billion USD
- Exodus still holds a NASDAQ record for 13 consecutive quarters of >40% growth.
- At the height of the company, there were approximately 4500 employees and 46 data centers. The headquarters was expanded to build two 8 story towers in addition to the 4 story building. At headquarters, facilities included on-site gym, massage therapists (for a fee), and cafe.
It was the best of times!
And it was the worst of time...
- On September 26, 2001 Exodus Communications, Inc. announced that it filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
- A major element of their failure was due to "Dot-com" customers who failed to pay their bills, resulting in severe cash shortages. Poor financial control of customer credit worthiness, collections and investment justification contributed to the cash crunch as much as declining demand from customers.
*clear throat* after being a young genius buying "every dip" in 1999 (to great benefit) I continued that practice past March 2000. That was not an enjoyable period.
